A year or two ago I was an expert witness and neither the other side’s appraiser or I thought the property located in Snohomish County was worth anywhere near the assessed value, and it was going up the next year.

Tax Year 2009 Market Land $260,000 Market Improvement $276,400 Market Total $536,400

Pending Property Values for Tax Year 2010
Market Land $220,000 Market Improvement $216,900 Market Total $436,900

How is this fact going to influence appraisals in 2010?

He tells me I’ll be sorry if I don’t, too. But I will take that bet.

Yeah well I happen to know that you’re already “regretting your decision to delay buying a home,” because our former County Executive declared it to be so last September.

;^)

RECESSION/DEPRESSION STALLING ALL SALES WORLDWIDE

How in the Hades is M/S going to sell a bunch of computers with new O/S globally when Japan’s exports are down 50% recently YOY; couple with China’s -25% drop? We already know America isn’t expanding business sales either.

I hear M/S is offerreing the new Windows O/S upgrade free, if you buy a new computer with the obsolete VISTA. Although this seems like a good plan short-term to get a few units sold, that would normally lay dormant on the shelves…..it sure puts a wrench in the gears for decent profits on the new O/S, especially with current VISTA laptops going new for recession/depression bargain prices, deflated at $399 up.

Personally, the feds agree with me too, I’m sticking with XP on refurbed units for the next year or two, until the XP windows updates stop or the new O/S is proven to work over the years [see to believe] on existing anti-virus S/W, etc., without its own convoluted “VISTA-like” version [that doesn't work a lot of the time anyway]. I’m not going to be M/S’s test department for failures.

Same with the outsourced 787, if that carbon fiber monster ever flies, I’m waiting a few years for track record safety reports, before I test ride it.

In other news: the chief quant jock at work, who for the past year or so has consistently been telling me that house prices can’t get much lower and interest rates can’t possibly influence pricing, is now shopping for a house. He tells me I’ll be sorry if I don’t, too. But I will take that bet.

That’s the type of advice that’s best to ignore. Back when we bought near the end of 2007 I was getting advice to keep our old house. I ignored it for two reasons, one of which was I didn’t believe anything only goes up, and the other being I didn’t want to have that much of my asset base tied up in real estate. But it was mainly the former.

In other news: the chief quant jock at work, who for the past year or so has consistently been telling me that house prices can’t get much lower and interest rates can’t possibly influence pricing, is now shopping for a house. He tells me I’ll be sorry if I don’t, too. But I will take that bet.

http://www.youtube.com/watch?v=yREOUxo6Qdc

http://hotair.com/greenroom/archives/2009/06/26/how-do-we-fix-this/

Ah, so what, summer’s here! Honey, get me another beer…

The seller accepted the offer, and the listing agent says the bank will respond in 2 weeks (not holding my breath).

I’ll keep you updated.

But in any case, my “argument” here (which you might not have been around for) is regarding people walking away who can make their payments. I’ve been saying people won’t be that likely to just walk away just because of negative equity, that you need something more like an inability to make the payments.

There are a number of reasons a bank won’t take a deed in lieu, including the existence of subsequent liens. Where such liens exist, the only route for the bank is foreclosure (or the owner managing a short sale that the junior lienholders agree to).

It’s more about “point of least resistance”. Not making your payments is a lot easier than filing for bankruptcy. Not making your payments is a lot easier than just about anything. So Scotsman will win “the argument”.

As to “handing over keys”, to do that in the easiest fashion is a Deed in Lieu. Most lienholders require the home be actively marketed for 90 days prior to approving a Deed in Lieu, so you don’t see them very often.

” It’s a great time to steal.”

“but my point is more you can’t tell what people will do based on what they say they would do when presented with a hypothetical situation.”

Wanna bet? Cripes, Kary, I’m an old Eagle Scout too, and value character, but we’ve got to be realistic. Self interest and the need for self preservation, whatever form that may take in our modern world, will win out over the interests of the state, the community, and especially some distant corporate entity.

But putting all that aside, the key part of the study isn’t the current percentage break down, but the trend. Given the trend, even if the current numbers are a bit biased toward the negative, the reality will match the reported figures soon enough. As negative equity holders and defaulters grow as a percentage of the population they will by definition shift the perceived norm. It wouldn’t surprise me to see defaulters heralded as the new intellectual pragmatists and those who continue to pay as fools, ranked on the same level as renters were three years ago. I know you’re not big on predictions, but as someone who has had pretty good success in that area might I suggest that following the data, not your own biases or values, is key.

This will get much, much worse before it gets better.

Guess what? If you did a survey of people, well over 50% would say they’d choose Chapter 13 (repayment plan) over Chapter 7 if they had $20,000 of credit card debt they couldn’t deal with outside of bankruptcy. In actual practice, that would be less than 5%.

True, that’s the easier way out, which would suggest that perhaps the mortgage situation would be higher too, but my point is more you can’t tell what people will do based on what they say they would do when presented with a hypothetical situation.

NICE OBSERVATION

It lends credence to today’s listing supply statistics being totally misleading, since many are planning on just handing their unlisted upside down mortgage keys to the bank anyway, whether or not they can afford the payments.

Survey data suggests that currently 25% of foreclosures are due to “strategic defaults,” when someone can afford to pay the mortgage, but still walks away. The % underwater, moral attitudes of the borrower and social stigma play a big part in the decision… and these factors are all changing for the worse from a lender’s perspective.

University of Chicago Working Paper
http://www.financialtrustindex.org/workingpapers.htm

Reviews:
http://www.economist.com/businessfinance/displaystory.cfm?story_id=13905502
http://www.calculatedriskblog.com/2009/06/new-research-on-walking-away.html=
http://blogs.wsj.com/economics/2009/06/26/when-is-it-cheaper-to-ditch-a-home-than-pay/

http://dilbert.com/strips/comic/2009-06-26/

(Eli)

Perfect! That just about covers everything we’ve analyzed in the last 5400 posts…

No disagreement on that from me. I can’t believe some of the things I heard about that attorney’s have done.

http://www.ritholtz.com/blog/wp-content/uploads/2009/06/dilbert-own-rent.gif

it should be posted as a sticky!

Yeah, that 30 hr class and the license exam weeds out everybody but the rocket scientists. The term “low barriers to entry” comes to mind.

And hey, I have standards. I mean I might use the master bedroom and shower, but that’s where I draw the line. I’m a Realtor©.;-)

Good call Joel, but I think the MLS deserves a little credit too for their up front, forth right dedication to transparency in the presentation of statistics. Nothing says clarity like computing a number in two different ways in different years and then using it in YOY comparisons in publicly released data with no reference to the change. Geeze, even baseball put an asterisk next to Roger Maris’ record when they changed the number of games in a season. But I guess expecting the MLS to hold themselves to the same high standards as the steroid leagues is asking too much. Maybe someone should report the MLS to the NAR. Don’t they pride themselves on their code of ethics? Isn’t that what makes them “Realtors”?

. . . . Naaaah

If Joel meant they didn’t do their research because they didn’t know the definition changed

This.

Many people have already decided the time is now. In May, pending home sales in the four-county Puget Sound area increased 21.5% from a year ago.

Ignoring the obvious issue of legality and ethics, don’t they realize that each time they go in a property it’s recorded? It’s like robbing a bank using a note on the back of a personalized deposit slip.

I checked and neither one is apparently still a member of the NWMLS.

SEATTLE — Qantas Airways has reached an agreement with Boeing Co. to defer the delivery of 15 Boeing 787 Dreamliners by four years and to cancel orders for 15 additional 787s planned for delivery in 2014.

In its announcement on Thursday, the Australian airline said the moves are the result of the recession and not related to the latest delays in the Dreamliner’s first flight.

“Qantas announced its original B787 order in December 2005, and the operating environment for the world’s airlines has clearly changed dramatically since then,” said Qantas CEO Alan Joyce in a statement.

SFH + Condo sales for King+Snohomish+Pierce+Kitsap
Pending May 2008: 4,526
Pending May 2009: 5,498
Difference: +21.5%

Closed May 2008: 3,840
Closed May 2009: 3,146
Difference: -18.1%

Looking at Tim’s county summary, Pending Sales for the 8 counties he tracks were up 28% YoY and for the same period Closed Sales were down 15%. Which number is more reflective of reality? And I don’t think it is a “timing issue” when there is a 43% difference between the two rates of change!

In May, pending home sales in the four-county Puget Sound area increased 21.5% from a year ago.

Somebody didn’t do their research.